Sharing Expenses

February 1, 2009

I am a physician-owner of a large clinic in Denver. I am wondering about the best way to calculate cost sharing percentages. For example, a plastic surgeon wants to join my practice five to six days a week. He wants two rooms, roughly 2,500 sq. ft. My overall expense to run the office on a monthly basis is $21,000. I have been told that a reasonable fee for cost sharing is $150 to $200/day or a flat rate of $7,000 per month, based on expenses alone. However, where do the intangible assets come into play? He is joining an already established practice. I feel there is value and am wondering how I go about adding this into the monthly cost-sharing scenario.

Question: I am a physician-owner of a large clinic in Denver. I am wondering about the best way to calculate cost sharing percentages.

For example, a plastic surgeon wants to join my practice five to six days a week. He wants two rooms, roughly 2,500 sq. ft. My overall expense to run the office on a monthly basis is $21,000. I have been told that a reasonable fee for cost sharing is $150 to $200/day or a flat rate of $7,000 per month, based on expenses alone. However, where do the intangible assets come into play? He is joining an already established practice. I feel there is value and am wondering how I go about adding this into the monthly cost-sharing scenario.

Answer: I have a few questions, actually.

How do you determine what the other physicians in the practice “pay out” for cost? Is it all equal? Do you have a figure for what each pays? Why not have him kick in that much?

Otherwise, it might help to break things down a bit.

If he is going to use your space, you have to charge him at least the going rate for space rental. According to the Denver Business Journal, average business rental these days is $20.99/square foot/year. So, for 2,500 square feet of space alone, he should pay $52,475 a year. You’ll, of course, know what the value of your exact space is.

Will he use your receptionist? He needs to pay a share of her salary based on expected patients processed a day and the percent of total patients that represents.

Will you do billing? What percent of the claims will he generate?

Collections? What percent of cash payments, for example, will your staff be collecting for him? He needs to “pay” them for their services.

Will your staff schedule his patients?

And, yes, he should pay something for marketing services you provide him.

Spell out your costs for everything.

However, he should not directly pay you for referrals or your referral base. I realize this is outside of Stark, but it’s still a good practice to follow, I think.

So, in short, I’d be more careful about looking at what services he’d use and placing a value on them before I’d get wrapped up on charging a premium for how great your practice is.

You need to know your bottom line before you go into negotiation on the softer issues anyway.